Predictive Marketing has actually been around a long time before the data mining age of the internet and credit card companies. But today, according to the website Stratigent, predictive marketing has evolved into the “process of using data mining and statistical techniques to forecast future demand and efficiently implement optimization solutions businesses can act upon”. In other words, predictive marketing can tell you what consumers are going to do before they do it so you can target your advertising and marketing efforts to just those people. Before the term data mining was around, advertisers knew to target certain demographics for certain products. The magazine publishing industry grew up around this concept – want to advertise to miniature model builders? Let’s design a magazine around their interests so we can sell advertising space to companies that want to sell to them!
But marketing has become so much more sophisticated. Statisticians can predict what you will do based on your shopping habits, what books you read, what sites you visit on the internet, where you live, your Facebook posts, and what you buy as well as what you don’t buy. Factor in your age, the type of car you drive, what clothes you wear and who you contribute money to and the sellers of everything from long term care insurance to video games can spend more money marketing to you and less to someone that will never buy their product.
The internet is not the only huge data source. The credit card companies and major retailers are also mining data. There is a presumably true story about an irate father that went to Target to complain to the manager that his 16 year old daughter was receiving coupons and mailings about baby products.
“What are you trying to do? Encourage her to get pregnant?”, complained the dad.
The manager was speechless and apologized profusely. He even called the father a week later to apologize again. That’s when the father sheepishly told the store manager that apparently there were things going on in his family that he had no clue about. Indeed, his daughter was pregnant. (Full story in Forbes – worth the read – here). Target Stores knew the 16 year old was pregnant before she told her parents! Creepy? Perhaps. Target marketing by Target Stores? You betcha.
Are you visiting Zillow every once in a while and looking at vacation homes in the mountains? Are you registered on their site? Then don’t be surprised to receive a postcard from North Carolina in the mail offering a fly and buy tour of a new mountain community. Did you just buy two dozen storage totes at Target? A moving company ad may show up on your Yahoo page. Did you buy home owners insurance 11 months ago? You will almost certainly receive a few home owners’ insurance offerings in the mail. These are all examples of predictive marketing.
Look at shoes on Zappos and shoe ads show up on your iPad while you are reading the latest sports scores. Did you shop on Amazon and then NOT BUY a certain item you spent a lot of time looking at? Expect to see THAT SPECIFIC ITEM advertised to you on totally unrelated sites.
Creepy or Helpful? Well, it certainly makes life easier for both the marketer and the shopper. Many shoppers are creeped out about by the apparent “stalking” of their actions – their credit card purchases and their internet habits. I fall into the “this is helpful, not creepy” camp, by the way. I WANT to read and hear more about things I am interested in.
I’m also interested in how I can benefit from this data as businessman. Can I predict who is going to buy or sell a house? Can I get that data in a form that is helpful to me? The short answer is yes. There are now companies that analyze and present this data to marketers in a format that we can utilize. Wouldn’t it be cool if I could market to the top 20% of the homes in my territory that were most likely to sell? Not just mail them something through the postal service, mind you, but show up in pop up ads on their computers and mobile devices and indeed give them valuable services like home appraisal and home staging and financial advice.
Done, done and done. It’s not cheap to get that data, and the data improves over time just like computerized home valuation models have done. But I can now market to the homeowner most likely to sell their home this year, and I can do it with print ads, direct mail, emails and targeted internet ads. While the data Is not cheap, I can then cut down on the amount of advertising I have to pay for by 80% or more.
I am intrigued by how predictive marketing is growing and getting better. It’s making us more efficient as sellers as well as buyers. What do you think? Helpful or Creepy?